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hdfc bank: Will bounce back strongly after pandemic behind us: HDFC Bank MD


Private lender HDFC Bank which posted a 16% rise in its net profit believes that it will bounce back sharply on all business metrics once the pandemic is behind and business normalcy returns.

“We have seen a decent healthy growth in our business metrics when we consider that this is one of the worst times in history and for the June quarter we were able to step out only 40 days,” said Sashidhar Jagdishan, MD, HDFC Bank while addressing shareholders at its annual general meeting. “Once the pandemic is behind us I am sure that your bank will bounce back strongly.”

Jagdishan added that the bank has a clearly focus on digitising and improving productivity without laying off people. The bank is currently facing a ban from the RBI on launching new digital initiatives and onboarding new credit card customers.

“It’s not at outages are only for us, public available shows that outages happens to global banks too, we are not the worst and not are we the best,” he said.

“The problem is the time we take to recover form these outages, we have seen the recovery time is lesser that the global average.

We are moving out existing architecture to cloud ready architecture.”

Jagdishan added that the bank has achieved 80% of the milestones set on upgrading technology infrastructure and was hopeful that the regulator would soon lift the ban.

The private lender on Saturday posted a 16.1% rise in its net profit to Rs 7729.6 crore for the quarter ended June, missing street estimates. A Bloomberg poll of analysts had pegged profit at Rs 7931 crore. The bank had posted profits of Rs 6659 crore same time a year ago. The lender also proposed a dividend of Rs 6.50 per equity share.

“These (Covid related) disruptions led to a decrease in retail loan originations, sale of third party products, card spends and efficiency in collection efforts,” the lender said.

“The lower business volumes, coupled with higher slippages, resulted in lower revenues, as well as an enhanced level of provisioning.”

Net interest income (interest earned less interest expended) for the quarter under review grew to Rs 17,009 crore from Rs 15,665.4 crore for the quarter ended June 30, 2020, driven by advances growth of 14.4%, and a core net interest margin of 4.1%.

The private lender’s gross bad-loan ratio widened to 1.47% at the end of June, from 1.32% in the prior quarter and 1.36% a year ago. On an absolute basis GNPAs rose 13.3% on an sequential basis to Rs 1.7 lakh crore. Net non-performing assets were at 0.48%.

Provisions and contingencies for the quarter ended rose 24% and came in at Rs 4,830.8 crore as against Rs 3,891.5 crore same period a year ago. Under the RBIs, one-time restructuring scheme, the lender recast loans worth Rs 7,800 crore, with retail loans worth Rs 5,457 crore forming the bulk of the restructuring, followed by corporate loans worth Rs 1,735 crore.

The lender said it’s loans grew by 14.4% to Rs 11.47 lakh crore at the end of June our order which retail domestic advances grew by 9.3%.

Amongst the retail loans, the vehicles loans continued to de-grow where-as the business banking segment grew 21% YoY and home loans grew 15%. Personal loans grew at 7.4% and Credit Cards outstanding grew 10.5% YoY.

Jagdishan said that 17000-18000employees out if it’s 1.2 lakh employees were infected due to the Covid virus and several bank employees lost their lives. The bank chief said that they took several initiatives including offering job opportunities to the kin of employees to lost their lives, bonus and salary payments for a full year and medical facilities among others.

The bank has conducted 370 vaccination camps and 80000 of its employees have been vaccinated atleast once. Jagdishan said that the lender aims to at least partially vaccinate all its employees in the next one month.

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